BRC confirms sharp price drops

Non-food prices fell by 2.4 per cent in December as a year on year comparison. The month on month drop was 2.7 per cent. The reduction in VAT has been a factor along with undprecedented levels of discounting according to the BRC.

Stephen Robertson, BRC Director General said: "Huge discounting by retailers, together with the VAT reduction, brought non-food prices down dramatically. Goods in every category were much cheaper - both compared with the previous month and a year ago. Electricals, books and home entertainment prices were all around five per cent lower than last year.

"It is clear retailers are holding down shop prices at a time when many of their own costs are increasing. The Government shouldn’t be adding cost burdens, such as record high business rate increases, at a time when margins are being severely squeezed."

Mike Watkins, Senior Manager, Retailer Services at Nielsen commented: "The VAT reduction has been passed onto shoppers and this contributed to a further fall in shop prices in December. But the acceleration of discounting by retailers in the run-up to Christmas, particularly in non-foods, also reduced prices and food inflation continues to slow from its peak in August."